Interest paid on Kenya’s debt increases by Sh56bn

The National Treasury building in Nairobi. FILE PHOTO | NMG 

By CHARLES MWANIKI

More by this Author

Summary

• Latest Treasury data shows that the country spent Sh271.3 billion in interest payments, of which Sh212.9 billion went towards domestic debt interest and Sh58.4 billion in external debt interest payments.
• A number of experts have been raising concerns over the sustainability of Kenya’s recent spike in public debt, which by the end of June had risen to Sh4.4 trillion, equivalent to 51.5 per cent of GDP.
• The country’s reclassification into a middle income country has seen it lose access to some concessional borrowing.

The interest charged on Kenya’s public debt rose by Sh56 billion in the 2016/17 fiscal year compared to the previous period, with debt payments gobbling up more than a third of the country’s annual revenue.

Latest Treasury data from the 2017 Budget outlook and review paper (BROP) shows that the country spent Sh271.3 billion in interest payments, of which Sh212.9 billion went towards domestic debt interest and Sh58.4 billion in external debt interest payments.

A number of experts have been raising concerns over the sustainability of Kenya’s recent spike in public debt, which by the end of June had risen to Sh4.4 trillion, equivalent to 51.5 per cent of GDP. The Treasury on the other hand has maintained that the debt remains sustainable, citing a growing economy and investments in infrastructure.

“Foreign interest payments amounted to Sh58.4 billion, compared to Sh42.5 billion in the same period of the fiscal year 2015/16. The domestic interest payments was Sh212.9 billion, higher than Sh172.9 billion paid in the corresponding period of the previous financial year,” says the Treasury in the budget  review paper.

“Expenditure on domestic interest payments was above the target by Sh31.1 billion while foreign interest was below target by Sh4 billion.”

The government has leaned heavily on borrowing to cover an ever widening budget deficit, which for the 2016/17 fiscal year stood at Sh709.4 billion, equivalent to 9.2 per cent of GDP.